Store Closings Create a Shrinking Landscape

2. Store Closings Create a Shrinking Landscape • Women’s clothing stores (NAICS #44812) generated positive sales results for all of 2018, Q4 2018 and January–June 2019 (see table on Page of the Profiler), but the tsunami of 2019 store closings will take a major toll on women’s apparel market. • 2019 retail store closings are forecast to total 12,000 and, although their numbers are relatively small, all the major department stores – Nordstrom, Macy’s, JC Penney, Kohl’s, Sears, etc. – are closing some stores. • The worst hit for women’s clothing stores are specialty retailers, with the bankruptcies of Dress Barn, Charming Charlie and Charlotte Russe accounting for more than 1,300 closings. J Crew, Francesca’s, Victoria’s Secret and others are planning to close stores.

3. Working Women Have Money to Spend – for More Casual Apparel • Despite many persistent labor equality issues, women continue to be a major labor force, with a 57.2% labor participation rate as of June 2019, or a total of 96.12 million women, which is a huge target audience for women’s clothing stores and the industry. • The casual athleisure trend has affected handbag sales. Casual nylon, polyester and cotton handbags accounted for 90% of handbags’ increased sales for the 12 months ending June 2019, although the casual sector represents just 11% of the total market. • The total units of women’s jeans sold during the 12 months ending February 2019 increased almost 22 million, or a total of 364 million pairs. Most (80%) were sold in-store, and off-price and specialty stores benefited the most.

4. The Online Apparel Storefront Continues to Expand • According to Internet Retailer’s 2019 Online Apparel Report, e-commerce clothing sales increased 18.5% during 2018 and accounted for 34.4% of all US apparel sales, which is 3.8 percentage points more than 2017’s 30.6%. • Although well-known retail chains generate a healthy percentage of online sales, the many disruptions to their businesses, especially store closings, have allowed more online-only stores to grab market share. • CPC Strategy’s November 2018 survey for its US Forecast on Apparel Shopping Trends report found 50.7% of Millennials and Gen Zers and 54.8% of adults 35–44 had shopped Amazon during the past 6 months for clothing.

5. New Methods to Attract the Digital Apparel Shopper • The CPC Strategy survey also revealed the largest percentage (59.2%) of the 2,000 respondents had purchased casual apparel online during the past 6 months, followed by active wear, 31.5%; outerwear, 26.3%; workwear, 18.0%; and formal wear, 13.2%. • Amazon isn’t resting on its laurels. It is trying to gain even more consumers’ trust when buying apparel by launching a Personal Shopper by Prime Wardrobe service during July 2019. A stylist helps customer select clothing according to their preferences. • As a direct response to the success of apparel-rental service Rent the Runway and as an attempt to capture more online sales, Urban Outfitters launched Nuuly during July 2019, and at an $88/month subscription compared to $159/month for Rent the Runway.

6. The Spotlight Shines Brightly on the Secondhand Apparel Market • According to the 2019 Resale Report from thredUP, revenues for the entire secondhand apparel market increased 20% from 2017 to 2018, to a total of $24 billion. The thrift & donations sub-sector accounted for $19 billion, and the resale sub-sector $5 billion. • The total market is forecast to more than double from 2018’s $24 billion to $51 billion by 2023. The resale sub-sector will increase from $5 billion to $23 billion while the thrift & donations sub-sector will increase more modestly from $19 to $28 billion, respectively. • Among the many factors driving the growth of resale apparel are the attitudes of young adults (18–37) who prefer environmentally friendly brands, are concerned about textile waste and are less compelled to own a large number of possessions.

7. A Lagging Tech Response to Consumers’ Expectations • Apparel’s December 2018 survey for its special report, 2019 Technology Outlook in the Apparel Market, found 42% of the industry professionals who responded said “improve the e-commerce experience” was their #1 method to support their 2019 goals. • E-commerce was also the most valuable tech initiative for 24% of these industry leaders, or 4 percentage points more than 2018; however, just 5% cited “advanced selling technologies” and 4% “innovation solutions.” • Despite a clear understanding of the importance of the e-commerce channel for the apparel industry, the average 2019 IT budget at the respondents’ businesses will be 11% of revenues and 48% planned no change to their 2019 IT spending.

8. Advertising Strategies • As mentioned in other Profilers, local women’s clothing stores can take advantage of the closings of major retail chains by offering a discount when presenting a receipt from a closed chain. • Local early-morning and evening news are excellent programs for women’s clothing stores to reach working women, offering incentives or coupons to complementary stores and services (coffee shop, spas, etc.) to help reduce the stress of the working day. • The women’s resale market has certainly increased to the point that local stores can benefit from selected and targeted TV advertising flights.

9. New Media Strategies • With the sales of casual handbags increasing more than the overall handbag sector, retailers have an opportunity to feature these in a quarterly online catalog, especially on Pinterest, showing how to coordinate an athleisure/casual look with the right handbag. • Because almost 70% of women purchase clothing online, local retailers must develop a robust, proactive online presence, cross-promoting in-store and online, and providing free shipping, BOPIS and other services to compete with larger retailers. • To appeal to younger women (who could be customers for decades), local stores should create and post social media content about how they are responding to customers’ demands for environmentally friendly brands and a reduction in textile waste.